Is it really so bad?
Posted on March 7th, 2008 – 3:08 PMBy Kara McGuire
Here’s a pile of negative financial news that makes it look as if we’re heading towards h-e- double-hockey sticks in a handbasket financed with a delinquent loan.
#1: The Mortgage Bankers Association said 2 percent of all loans are now in foreclosure and late payments are up 6 percent.
#2: The Federal Reserve announced that Americans average home equity dipped below 50 percent for the first time since such data collection started in 1945.
#3: We lost 63,000 jobs in February– the worst job market in five years–says the Labor Department.
#4: The DOW dropped below 12,000.
I’ve been making it a habit lately to be the life of the party and turn conversation to the economy at any opportunity I get. I ask whether people are feeling strapped personally, or if much of what they read in the papers doesn’t jive with their personal economy.
Believe me, I’m feeling the prices rising on gas and food and am sensitive to the fact that I could lose my job and probably won’t see a pay raise any time soon. But we’re doing OK. This Washington Post story says we’re not the only ones.
What do you think? Are reports of financial instability and doom and gloom overblown? Are we collectively okey-dokey? Or do you believe things are only going to take a turn for the worse?
You have 30 minutes to answer this essay question, starting NOW.
22 Responses to "Is it really so bad?"
Thank God there is a race for the Democratic nomination. Otherwise the economy is all the media would have to talk about.
Iraq is doing better. No scandals. No serial murders. No tornadoes, earthquakes or hurricanes. The Bird Flu thing never really panned out like they hoped. No missing kids. No shark attacks. THE ECONOMY! Thats it! The economy is going to tank! Look at all of these ominous numbers!
I don’t think overblown…we may see worse things in 2009 as now a lot of businesses are working off business booked in 2007. Collectively - boomers have saved too little for retirement and most people under 40 have not been saving either. Time to hunker down.
Too much/many:
- government, personal and corporate Debt
- imports
- service-sector jobs
- consumption
Too little/few:
- manufacturing
- exports
- saving
- capital investment
It will be over when the excesses correct themselves. There’s a long way to go. For awhile, a tanking economy will tend to make the excesses worse. In the end, we may be a lot poorer, but our prospects for the future will be better.
-Ryan
My husband and I have been negatively impacted by the down turn in the economy. We chose to leave Atlanta to return to the wonderful State of Minnesota in the hopes that our small starter home would sell quickly, it still hasn’t, and since my husband was unable to secure a full-time job we have been unable to pay the mortgage and it is now in foreclosure. While we were smart and didn’t chose an ARM when we bought the home our minimal income does not allow us to pay both the mortgage in Georgia and rent here in Minnesota.
We are barely keeping our heads above the water and are obviously not able to save for the future right now, have depleted our savings, and maxed out credit cards paying for necessities while my husband was unemployed for three months.
No *scandals*!? The RNC hires the Swift Boat guy as treasurer, and he fabricates audits for *years* for the RNC, including letterhead, before being found out because actual audits couldn’t find anyone to talk to?! Hundreds of thousands of dollars are missing, and no *scandals*? Just another day under this corrupt Republican administration!
It is bad, has been for 5 years. Doesn’t look to get any better soon the Dems are unwilling to do what it takes. We need a third party. Energy, health care (insurance), and high actual inflation (not what is reported) are destoying the workers in America. There was a time when we could pay off loans with 18% interest, now we can’t pay off loans with 0% interest.
I think the government should start mandating savings classes. It seems like everyone I see doesn’t know how to save or doesn’t have a penny save up. How can you live this way?!
I try to take the recession stories with a grain of salt. Last night around 7:00pm my wife and I went out for dinner in Minneapolis. We went to three restaurants where the waits were in excess of 45 minutes for a table, before finally finding a fourth with wait times under 1/2 hour. it’s always like this every time we go out to eat. If I was hurting economically dinners out on the weekend would be the first thing to go! Is it like this everywhere?
DOW is not an acronym, nor is it a ticker symbol. The shorthand for the DJIA is Dow, not DOW.
Emily,
So….you’re a victim of the “economy?”
You “chose” to leave Atlanta.
1- Did you have employment lined up?
2- Are you receiving finacial aid from the state?
3- Was this move well planned?
It sounds like you may be a contributing factor to the “down turn in the economy.”
Am I helping to pay your way?
Brian,
Where was all the positive media during ten plus years of record building/purchasing/ and selling of homes. Where was the DOW when Bush took office in 2000?
What was the DOW and NASDAQ doing in the last year of the Clinton administration?
Who do YOU think was the driving force in securing NAFTA?
Get serious.
Thank you MS.
I agree with Matt! I’ve wondered too why dining hasn’t seemed to take a hit if consumer confidence is truly lacking. Anyone have ideas?
We jokingly call it pre-recessionary spending: everyone’s getting their purchases in before it gets worse 
MS,
I think we all know what Kara meant. Don’t be so anal rententive.
DJI: Summary for DOW JONES INDUSTRIAL AVERAGE IN - Yahoo! FinanceGet detailed information on DOW JONES INDUSTRIAL AVERAGE IN (^DJI) including quote performance, Real-Time ECN, technical chart analysis, key stats, …
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Increasing asset prices, including stocks, are primarily good for those who already hold those assets. For those with fewer assets, declining prices allow them to purchase those assets and receive the capital gains. At the same time, higher interest rates encourage savings and drive down stock prices. The same is true of real estate prices: lower real estate prices are better for everyone; those lower prices allow people to buy homes and eventually own them.
The way to force stock and real estate prices down, to encourage savings, and to allow the little guy to get ahead is through higher interest rates. Right now, the government is in the business of assuring Wall Street’s success by holding rates down using inflation. Such low rates tend to foster bubbles, which are good for those who held assets before the bubble began, but not good for folks who bought using the easy money during the bubble, including most subprime borrowers.
Free market advocates should realize that rising housing and stock prices are more beneficial when they are based on increasing efficiency in an economy, and not on easy money and low interest rates that tend to deceive small investors into making mistaken financial decisions.
We can now see clearly that real estate was overbuilt with easy money; many homes are vacant, and prices are falling. It would have been much better if prices had stayed lower in the first place.
-Ryan
I’m amazed that anyone would try to hang the housing bubble on Mr Clinton and not where it squarely rests, with arch-Republican Greenspan. He fed the housing bubble (hence those “ten plus years of record building/purchasing/ and selling of homes”).
Clinton’s (really Robert Rubin’s) fiscal policy was fiscally conservative, much more so than the current crop of “conservatives” both in Congress and the White House, and would have resulted in wiping out the deficit had not the “conservatives” intervened. Which is exactly what Keynes called for–Buy down debt when times are good, run a deficit when times are bad.
It’s funny, since this sub-thread started with *scandals*, not with economics. For a systematic look at the poor performance foisted on the U.S. by Republican administrations, check out
http://angrybear.blogspot.com/2007/05/comparing-presidents-comparing-parties.html
Emily, I’m with you! Things are sure a lot tighter at our house with a job loss- one of the thousands- those are real people not having jobs and benefits, people who want to work.
We’ve been feeling it for 3 years. I lost my job and had to start over, and my wife has not had a raise in hers for over 3 years… Rising commodities prices are really putting a crimp in our pocket book.
I’m doing fine for now, but the agency I work for (state gov’t) just had a 4% cut announced to the budget. That means that there’s a chance of layoffs. Barring that, state employees don’t exactly make a mint , so while I’ll get small cost of living increases still, commodity prices are definitely rising faster than my salary. I’m doing fine after making adjustments to my personal budget, but if prices keep rising, I’ll have to make drastic changes.
Sorry to burst your bubble Bill but YOU are not paying my way. Sure times are tough but I do not and will not rely on the government for assistance.
Yes, I had employment lined up. However, my husband, who brings in the secondary income, was not able to find employment right away and that is what put us behind.
I do not play the victim. The economy did not cause this to happen to us but it definitely did not help our situation either.
Yes it is bad (at least for us). I never used to think to much about money. Now I’m realizing how bad things are (prices, etc). We’re spending more than we make. We are cutting back on the extra stuff (vacations, eating out 5 times a week, etc.). We’ve even come up with a phrase to sum up the situation… “The year of the save”, so when one of us wants to spend money (say a trip to the casino), the other simply blurts the phase out and we move on with life. Best of luck to those in a simular situation.
the older generation is in trouble because many of them were told the wrong way to save for their future. Agents everywhere told them to get the wrong plan that would make them more money and the consumer or investor less.
the company formally known as IDS is guilty of this. When banks started offering high yield cd’s to the middle class they needed to compete but because
the agent made an avg. of about $20 per account they needed a way to make more money off of the consumer, so they started offering whole life ins. which gave them an $1800 commission
for example whole life ins., people were told that their whole life ins. policy would become their retirement this is false. While their premiums were not being raised the money to cover that came out of their so called retirement, or their so called CASH VALUE account. so when they go to collect their cash value nothing or very little is there and often times the cash value is not enough to cover all the charges on their policy so the consumer ends up owning thousands.
IDS is guilty of this along with other agencies who have since been taken to court. Research this and you will see.
Another reason is because people were told to worry and put their savings in a low to medium yield. a high yield would have given them twice the amount they have today.
Their are books and articals that will go into depth on this check them out it may save your retirement.
as for the younger generation either their parents who learned the wrong thing are teaching them the wrong thing and or none is teaching them anything. my parents didn’t talk to me about my financial future. did yours?
their are many other reasons to this but I just don’t have the space. bottom line is
the economy has been rising aggressively
for years their have been down days or down years. this country is full of billion dollar companies who strive for gain and they will stop at nothing to get their. The country will never fall
research the history and why a certain generation does not have money and you will understand. today college students every where are being told the right way to do things as the older generation finds out that they did the wrong. worry not about our country but learn how to get the most of your money
if you are 25 years old and put $200 dollars a month away you will have well over a million by retirement in a high yield account. pay off your house and car and put those funds toward that account and have even more or retire early. only buy term ins. don’t trust your agent because you went golfing with him, chances are he will make $10,000 of your whole life policy. And vote to keep government at its limits with the people
they are here to protect our country not tell us how to live our lives.
I remember, growing up, my dad would complain that his salary didn’t keep up with inflation, etc. So while things seem very high right now. It’s kind of like that song “You’re older than you’ve ever been, and now you’re even older. Now you’re even older. And now you’re older still.”
